Making mistakes is human nature. In the same manner, the accountant who is responsible for recording the financial data of a firm will sometimes make errors as well. The error of omission and error of commission are the two types of errors in accounting that most accountants often experiences while recording financial transactions of an organization. In this article, we will understand the complete difference between the error of omission and error of commission. The blog contains the following set of concepts.
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Definition Of Error Of Omission
In accounting, an error of omission refers to the accounting error that occurs when the financial transaction is not recorded in the books of accounting, in whole or partially. This means, that this type of error usually occurs when the accountant unknowingly omits or forgets an entry in the accounts books or ledgers accounts. Further, error of omission has the following two categories.
- Complete Omission- This type of error arises when the transaction is not recorded in the journal and so, it is not affixed to the ledger also. These errors do not impact the trial balance because both debit and credit aspects are influenced by the same aggregate.
- Partial Omission- This kind of error arises when the data is partially recorded in the journal or subsidiary books but is not posted in the ledger. Such errors create a variance in trial balance because they impact only one account.
Definition Of Error Of Commission
On the other hand, errors of commission occur when an accountant incorrectly records the financial transactions of the firm in account books or ledgers, etc. This means that such kind of financial errors takes place when the bookkeepers, accountants, or clerks deliberately make errors due to a lack of knowledge, carelessness, and other factors. Some of the cases where errors of the commission take place are:
- Error is committed when the wrong amount is entered in the account books.
- When an entry is posted more than one time.
- Errors take place during balancing the accounts
- The error takes place while carrying a wrong total forward from one to another page.
Error Of Omission Vs Error Of Commission(Table)
|Basis For Difference||Error Of Omission||Error Of Commission|
|Definition||It refers to the accounting errors that take place as a result of partial or a whole omission of the transaction from the account books.||It refers to the error that takes place as a result of an incorrect recording of a financial transaction in accounting books or ledgers.|
|Reason Of Occurrence||Mistake||Lack of knowledge, carelessness, inexperience, etc.|
|Agreement Of Trial Balance||complete omission results in trial balance agreement, but partial omission will not result in the agreement of trial balance.||May or may not agree.|
Key Differences Between Error Of Omission And Error Of Commission
- In accounting, an error of omission refers to the accounting error that occurs when the financial transaction is not recorded in the books of accounting, in whole or partially. On the other hand, errors of commission occur when an accountant incorrectly records the financial transactions of the firm in account books or ledgers, etc.
- In the case of error of omission, the complete omission results in a trial balance agreement, while partial omission will result in disagreement of the trial balance. On the other hand, in the case of an error of commission, the trial balance may or may not agree.
- Error commission occurs because of a lack of knowledge, carelessness, and negligence of the accounts bookkeeper. On the other hand, the error of omission takes place by mistake i.e it occurs when the bookkeeper forgets to enter data in the account books.
So, we can conclude that both error of omission and error of commission are the two types of errors in accounting that are totally different from one another. It is compulsory for an accountant to oversee and rectify all the errors before entering the data into the record books.